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(Self-plagiarised from a comment on this post at Bobvis.)

The notion that the case for liberalism rests on real markets acting like ideal markets is a strawman. Real markets don't have to be as good as ideal markets--they just have to be better than real governments.

To point out that real markets don't behave exactly like ideal markets, with the implicit assumption that an omniscient, omnipotent, and omnibenevolent government can make everything better, is not to make an effective case against liberalism. To do that, you must identify the specific problems caused by market imperfections and then make a convincing case that real--not ideal--governments can effect an improvement net of unintended consequences.

Found Humor

Apropos nothing, I am far more entertained than any adult should be by the sentences formed in the "Recent comments" block in the right sidebar by the concatenation of the first few words of a comment and its author's name. Current favorite: "You haven't killed Greg N. (not verified)."

Site Changes

We're trying to shrink the sidebars to make room for some new stuff, so I've made the following changes:

  • Shrank the font.
  • De-bolded the links.
  • Removed the dots from the lists and replaced them with overhanging indentation (all lines except the first are indented).
  • Removed author names from the Recent Community Posts sidebar.

Let us know what you think of these changes. Do you prefer the smaller font for the sidebar, or is it too hard to read? How do you like the overhanging indentation? Would you prefer that the author's name show up in the Recent Community Posts sidebar box?

New Editor

The TinyMCE WYSIWYG editor was turning out to be more trouble than it was worth, so we're trying out BUEditor.

This is a non-WYSIWYG editor, so it will help to know basic HTML, but if you don't you can use the buttons along the top for images, links, bold, italics, block quotes, and lists. The eye button invokes a JavaScript preview function that allows you to preview your post or comment without reloading the page.

Feel free to leave feedback as a comment on this thread. The buttons are customizable (by site admins), so please let us know if there are any additional buttons which you would find helpful.

New Fonts

I did some fiddling with the site's fonts last night. Feel free to post feedback as a comment on this post.

On Stagnating Wages for High School Graduates

In recent decades, incomes of high school graduates have been fairly stagnant, with the benefits of higher productivity appearing to go mostly to college graduates. One possible interpretation of this fact is that the educated elite are somehow siphoning off the benefits that rightly belong to the middle and lower classes.

However, I suggest that stagnation in wages for the non-college-educated is due at least in part to increased rates of college enrollment. In the last 30 years, the percentage of Americans 25 and over with at least a bachelor's degree has nearly doubled, from 15% to 29% (see this CSV file), while the percentage with no college education at all has fallen from 71% to 46%.

This has most likely had a cream-skimming effect. People with high school diplomas are not interchangeable--among the 71% of adults with no college education in 1977, there was a wide range of variation in intelligence, conscientiousness, and other qualities needed for academic and professional success. The marginal college graduates have been drawn disproportionately from the upper end of that distribution, pushing the median high school graduate with no college education down from the 53rd percentile in terms of educational attainment to the 30th percentile.

Furthermore the opposite effect has taken place on the other end of the scale. Since 1977, the percentage of Americans lacking a high school degree has fallen from 35% to 15% as aggressive social promotion and a stronger cultural emphasis on completing high school has pushed more marginal students in at the bottom of the high-school graduate pool.

Taking these two factors into account, it's no surprise that wages for high school graduates with no college education have failed to increase significantly in recent decades, but there's nothing sinister or ominous about this--it's just a statistical artifact of the way we classify people.

Too Beautiful To Live

I just want to put in a quick plug for the immensely entertaining TBTL, a new apolitical talk radio show which is probably Too Beautiful To Live. It airs on Seattle's 710 KIRO from 19:00-22:00 (Pacific). For those outside of Seattle or unable to listen during those hours, the show's web site offers live streaming and MP3s of the ten most recent episodes.

The show consists of host Luke Burbank, producer Jennifer Andrews (formerly of Peter Weissbach's show on KVI, for readers who were in Seattle five years ago), and engineer Sean Trattori screwing around and saying whatever happens to pop into their heads, with occasional input from guests and the "tens" (of listeners).

TBTL makes liberal use of running gags, inside jokes, and drops (i.e. sound bites, which I would conservatively estimate account for about 103% of the show's air time--sometimes they play two simultaneously), which I suspect make it very much a love-it-or-hate-it thing.

Anyway, great show. Give it a listen, and if you love it remember that I told you. If you hate it, remember that this whole Verse thing was Jonathan's idea.

Climate Change

It snowed yesterday in Seattle, one day later than the latest snow day on record (April 17th, sometime back in the '70s). This made me realize what a brilliant PR move renaming "global warming" to "climate change" was. The idea of "global warming" is too fragile; one snow day in mid-April, and people start to doubt. Granted, this isn't fair--the warming is small and observable only in long-term trends--but it's how people think.

With "climate change," though, the chaotic nature of weather works in your favor. Anything out of the ordinary can be interpreted as evidence of climate change, and there's always something out of the ordinary going on somewhere in the world. Sure, a record heat wave is great, but if all you have is unseasonable snow or two strong hurricanes in a single year, that works, too.

Adverse Selection and Risk Aversion

Adverse Selection is often cited by proponents of socialized health care as a reason why private health insurance cannot work. Although the people who do so usually use the term incorrectly and get its implications backwards, as David Friedman catches Austan Goolsbee doing here, it is true that adverse selection does pose a problem for insurance markets (see Friedman's linked post for an explanation if you're not familiar with it).

This problem is not specific to health insurance. Other types of insurance such as life and fire insurance are also prone to adverse selection, yet we have functional markets in these. Alex Tabarrok gave several possible reasons for this here.

One factor I haven't seen addressed elsewhere is risk aversion. Even though buying health insurance is a negative-expected-value proposition for me, it still has positive utility because of risk aversion. That is, I prefer a certain loss of $2000 per year in premiums to a small but nonzero risk of losing my life's savings due to a catastrophic medical expense, even though the former option will cost me more on average.

So while adverse selection does create a disincentive for me to purchase insurance, risk aversion negates this effect by creating an incentive for me to buy insurance even when its expected value is negative.

Department of Unmarketable Studies

Apparently some students at Hunter College in New York are agitating for an expansion of the college's Asian American Studies Program. Because nothing puts a young Asian-American on the road to success and mainstream assimilation like a degree in Asian-American Studies.

Philosophy: Who Needs It?

Half Sigma notes a New York Times article on the increasing popularity of philosophy as an undergraduate major, which brought to mind this document (PDF) from the ETS showing average GRE scores broken down by intended field of graduate study. Philosophy students arguably did best overall (#1 in verbal and writing, and fairly well in quantitative, though obviously not as well as the engineers and physical scientists).

There's probably some selection bias going on there--only a subset of undergraduates go on to graduate school--but it's interesting, since normally one thinks of philosophy as a step above communications. Maybe the formal logic keeps out the riff-raff.

Still, you have to wonder: If they're so smart, why are they devoting the first ten years of their adult lives to getting an advanced degree in philosophy?


FYI, trackbacks should be working now. What this means is that if you link to a post on another blog that has also enabled trackbacks, you can create a link back to your post on their blog. The way to do this is to look for a "trackback url" somewhere on the target post (you can this post's trackback url below). Once you find it, copy and paste it into the box that says "Send Trackbacks:" in TDR's "Submit Blog entry" page (the same page where you type in the text of your post). When you hit the "Submit" button, a new link should be created back to your post on the target post's page.

Due to a quirk of our blogging software, the trackback window uses a rich text editor, which causes an attempt to trackback to a marked-up URL. I'm working on a fix for this, but in the meantime the workaround is to click the "disable rich-text" link below the trackback text area. This will turn off the rich text editor and allow you to submit plain-text trackback URLs.

Let us know if you encounter any other issues.

The Sky Is Rising!

I was pretty young at the time, so I may not be remembering this clearly, but wasn't there quite a bit of hand-wringing in the 1980s over insourcing ("The Japanese are buying up our country!")?

Sauce for the Gander

Bobvis initially referred to lines like this in Obama's speech as hateful references to foreigners taking American jobs:

This time we want to talk about the shuttered mills that once provided a decent life for men and women of every race, and the homes for sale that once belonged to Americans from every religion, every region, every walk of life. This time we want to talk about the fact that the real problem is not that someone who doesn’t look like you might take your job; it’s that the corporation you work for will ship it overseas for nothing more than a profit.

In the comments, though, he softens this criticism a bit:

Obama is *tapping into* latent hate of foreigners, but I admit he is not explicitly endorsing it.

Fair enough. While I would argue that there's a certain degree of bigotry inherent in the idea that Americans deserve jobs more than foreigners simply by virtue of being American--it's true that Obama doesn't explicitly demonize foreigners.

But it's worth noting that this isn't recognized as a valid distinction by the self-styled "anti-racists" on the left, many of whom are no doubt supporters of Obama. According to them, pandering to racial animosity is racist, even if the panderer does not personally share in that animosity or explicitly invoke it.

Case in point: The infamous "Hands" ad from Jesse Helms' 1990 Senate Campaign, which was labelled as racist by the left. Like Obama's speech, the ad didn't attack racial minorities--rather, it attacked a government policy that would take jobs away from whites and give them to racial minorities.

The difference is that while the Helms ad argued against government-enforced racial discrimination, Obama is arguing for government-enforced ethnic discrimination. One can legitimately argue that the Hands ad was not bigoted and that Obama's speech was, but not the other way around.

Individualism in East Asian Cultures

Half Sigma says East Asians are collectivist, based on a study of Japanese and Western children:

[Quoting a study:] The Western students did not much change their assessment of a character’s mood no matter what was happening with the other characters. But for most of the Japanese participants, it made a measurable difference. If the figure in the center had a happy face but those in the background were sad or angry, they tended to give the happy figure a lower score. If everyone was happy, they gave the figure in the center a higher one.

Also, on ordering at restaurants:

The experiment reminds me of an observation in the book Predictably Irrational. In restaurants in the United States, every member of a party usually orders something different, because copying someone else’s order is frowned upon. But in Hong Kong, the opposite often happens. Everyone at the table orders the same thing.

A comment I wrote in response:

You can't generalize from the Japanese to all East Asians, as the Japanese are an extreme case. IME, the Chinese tend to be much more individualistic. For example, the Japanese Dream has traditionally been to get a good job at a major corporation and work there for life, whereas Chinese people generally aspire to own their own businesses.

I don't know about Hong Kong specifically, but I've eaten out with several different groups of Chinese people, and the usual procedure is to order several different dishes and share them. I guess you could point to this as a form of collectivism, too, but even at the individual level it has the advantage of allowing more variety than the American custom of each person ordering his own entree.

Comments from people more knowledgeable on either topic are welcome.